While the PPA inspectors issued citations against the drivers, not SideCar, the drivers pled "not liable" and SideCar plans to defend them, Paul told us.

SideCar had only been operating a limited test in Philadelphia on weekend evenings. After the impoundments, SideCar told its drivers to stop, and it ended the test early, Paul told us.

But Paul plans to restart SideCar operations in Philadelphia on Friday evening.

That could make for a dramatic confrontation with inspectors.

SideCar, based in San Francisco, has raised $10 million from investors, including Google Ventures. Its drivers have taken passengers for 100,000 rides so far. But it's operating on uncertain legal ground elsewhere as well.

In its home state of California, SideCar got a $20,000 fine from the California Public Utilities Commission for running an unlicensed charter-party service. SideCar objected to that classification, and it's fighting the fine while negotiating an agreement with the commission.

ZimRide, the operator of a SideCar-like service called Lyft, and Uber reached agreements with the CPUC. So far, SideCar hasn't.

We asked Paul if SideCar objected to the terms the CPUC offered ZimRide and Uber.

"Yes, or otherwise we would have signed it," Paul said. He couldn't get into the details of what he objected to because of a confidentiality agreement he'd signed with the commission.

"We're still talking," Paul said. "We're going to stand by our principles and we'll see if we end up signing something."

SideCar hasn't run into trouble in Seattle or Austin, Paul told us. And Philadelphia is the only municipality that has gone as far as impounding drivers' cars.

But so far, the regulatory battle in California has cost his company $500,000.

"These actions by government are a serious drain on resources in the innovation economy," Paul said.